| ITEM 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
On April 19, 2023, Canadian Pacific Kansas City Limited (f/k/a Canadian Pacific Railway Limited), a Canadian corporation (the “Corporation”) and its subsidiary, Canadian Pacific Railway Company, a Canadian corporation (“CPRC”) completed (i) previously announced offers to exchange (the “Exchange Offers”) any and all of Kansas City Southern’s (“KCS”) outstanding 3.125% Senior Notes due 2026, 2.875% Senior Notes due 2029, 4.300% Senior Notes due 2043, 4.950% Senior Notes due 2045, 4.700% Senior Notes due 2048, 3.500% Senior Notes due 2050 and 4.200% Senior Notes due 2069 (collectively, the “Old Notes”) for CPRC’s 3.125% Notes due 2026, 2.875% Notes due 2029, 4.300% Notes due 2043, 4.950% Notes due 2045, 4.700% Notes due 2048, 3.500% Notes due 2050 and 4.200% Notes due 2069, each unconditionally guaranteed on an unsecured basis by the Corporation (collectively, the “CPRC Notes”) and cash; and (ii) the related solicitation of consents (the “Consent Solicitations”) from the holders of the Old Notes for the adoption of certain amendments (the “Amendments”) to the Indenture, dated December 9, 2015 (the “KCS Base Indenture”), by and among KCS, the guarantors party thereto and U.S. Bank Trust Company, National Association, successor in interest to U.S. Bank National Association, as trustee (the “KCS Trustee”), and the supplemental indentures governing the Old Notes (collectively, with the KCS Base Indenture, the “Old Notes Indentures”).
The Exchange Offers commenced on March 20, 2023 and expired at 5:00 p.m. ET on April 17, 2023 (the “Expiration Date”). As of the Expiration Date, the principal amounts of Old Notes set forth in the table below had been validly tendered and accepted for exchange by CPRC and were subsequently transferred to KCS for cancellation:
| | | | | | | | | | | | |
Series of Old Notes Subject to the Exchange | | Aggregate Principal
Amount
Tendered and
Cancelled | | | Percentage of Total
Outstanding Principal
Amount of such Series of
Old Notes Tendered
Cancelled | | | Aggregate Principal Amount of
Old Notes Outstanding following
Cancellation | |
3.125% Senior Notes due 2026 | | $ | 226,911,000 | | | | 90.76 | % | | $ | 23,089,000 | |
2.875% Senior Notes due 2029 | | $ | 414,841,000 | | | | 97.61 | % | | $ | 10,159,000 | |
4.300% Senior Notes due 2043 | | $ | 448,453,000 | | | | 99.96 | % | | $ | 198,000 | |
4.950% Senior Notes due 2045 | | $ | 463,066,000 | | | | 92.77 | % | | $ | 36,099,000 | |
4.700% Senior Notes due 2048 | | $ | 497,866,000 | | | | 99.57 | % | | $ | 2,134,000 | |
3.500% Senior Notes due 2050 | | $ | 542,556,000 | | | | 98.65 | % | | $ | 7,444,000 | |
4.200% Senior Notes due 2069 | | $ | 420,491,000 | | | | 98.94 | % | | $ | 4,509,000 | |
Following such cancellation, $83,632,000 aggregate principal amount of Old Notes remain outstanding.
As of the Expiration Date, all conditions to the Exchange Offers were satisfied. In connection with the settlement of the Exchange Offers, CPRC issued $ 226,823,000 of 3.125% Notes due 2026, $414,838,000 of 2.875% Notes due 2029, $448,453,000 of 4.300% Notes due 2043, $462,991,000 of 4.950% Notes due 2045, $497,861,000 of 4.700% Notes due 2048, $542,518,000 of 3.500% Notes due 2050 and $420,463,000 of 4.200% Notes due 2069 and distributed the total exchange compensation and interest accrued on the Old Notes to eligible holders of Old Notes who validly tendered and did not validly withdraw such Old Notes at or prior to the Expiration Date. The CPRC Notes were issued under and are governed by the terms of the Indenture, dated as of September 11, 2015, by and among CPRC and Computershare Trust Company, N.A., as successor to Wells Fargo Bank, National Association, as trustee (the “Trustee”) and the Sixth Supplemental Indenture, dated as of April 19, 2023, by and among CPRC, the Corporation, as guarantor, and the Trustee (the “Sixth Supplemental Indenture”).
With respect to the Old Notes, at 5:00 p.m. ET on April 17, 2023, the requisite consents applicable to each series of Old Notes were obtained to adopt the Amendments to the Old Notes Indentures. Accordingly, KCS entered into a Thirteenth Supplemental Indenture, dated as of April 19, 2023 (the “Thirteenth Supplemental Indenture”), by and among KCS, the guarantors party thereto and the KCS Trustee, which amended and supplemented the Old Notes Indentures and adopted the Amendments. The Amendments, among other things, modified or eliminated certain reporting requirements, restrictive covenants and events of default in the Old Notes Indentures applicable to the respective series of Old Notes. The foregoing summary of the Thirteenth Supplemental Indenture does not purport to be complete and is qualified in its entirety by reference to the complete terms of the Thirteenth Supplemental Indenture, a copy of which is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
